Texas 2021 - 87th Regular

Texas House Bill HB1510 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	H.B. No. 1510
	1	+	By: Metcalf, et al. (Senate Sponsor - Creighton) H.B. No. 1510
	2	+	(In the Senate - Received from the House April 20, 2021;
	3	+	April 21, 2021, read first time and referred to Committee on
	4	+	Jurisprudence; April 22, 2021, rereferred to Committee on Business &
	5	+	Commerce; May 4, 2021, reported favorably by the following vote:
	6	+	Yeas 7, Nays 0; May 4, 2021, sent to printer.)
	7	+	Click here to see the committee vote
2	8
3	9
	10	+	A BILL TO BE ENTITLED
4	11		AN ACT
5	12		relating to the response and resilience of certain electricity
6	13		service providers to major weather-related events or other natural
7	14		disasters; granting authority to issue bonds.
8	15		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	16		SECTION 1. Section 36.402(a), Utilities Code, is amended to
10	17		read as follows:
11	18		(a) In this subchapter, "system restoration costs" means
12	19		reasonable and necessary costs, including costs expensed, charged
13	20		to self-insurance reserves, deferred, capitalized, or otherwise
14	21		financed, that are incurred by an electric utility due to any
15	22		activity or activities conducted by or on behalf of the electric
16	23		utility in connection with the restoration of service and
17	24		infrastructure associated with electric power outages affecting
18	25		customers of the electric utility as the result of any tropical
19	26		storm or hurricane, ice or snow storm, flood, or other
20	27		weather-related event or natural disaster that occurred in calendar
21	28		year 2008 or thereafter. System restoration costs include
22	29		mobilization, staging, and construction, reconstruction,
23	30		replacement, or repair of electric generation, transmission,
24	31		distribution, or general plant facilities. System restoration
25	32		costs shall include reasonable estimates of the costs of an
26	33		activity or activities conducted or expected to be conducted by or
27	34		on behalf of the electric utility in connection with the
28	35		restoration of service or infrastructure associated with electric
29	36		power outages, but such estimates shall be subject to true-up and
30	37		reconciliation after the actual costs are known. System restoration
31	38		costs include reasonable and necessary weatherization and
32	39		storm-hardening costs incurred, as well as reasonable estimates of
33	40		costs to be incurred, by the electric utility, but such estimates
34	41		shall be subject to true-up and reconciliation after the actual
35	42		costs are known.
36	43		SECTION 2. Chapter 36, Utilities Code, is amended by adding
37	44		Subchapter J to read as follows:
38	45		SUBCHAPTER J. LOWER-COST FINANCING MECHANISM FOR SECURITIZATION
39	46		FOR RECOVERY OF SYSTEM RESTORATION COSTS
40	47		Sec. 36.451. PURPOSE AND APPLICABILITY. (a) Except as
41	48		otherwise specifically provided by this subchapter, the same
42	49		procedures, standards, and protections for securitization
43	50		authorized by Subchapter I of this chapter and, to the extent made
44	51		applicable to Subchapter I of this chapter, by Subchapter G,
45	52		Chapter 39, apply to the lower-cost financing mechanism for
46	53		securitization of transition costs or system restoration costs as
47	54		provided by Subchapter I. To the extent of any conflict between the
48	55		provisions of this subchapter and Subchapter I of this chapter or,
49	56		to the extent made applicable by Subchapter I of this chapter,
50	57		Subchapter G, Chapter 39, in cases involving the securitization of
51	58		system restoration costs under this subchapter, the provisions of
52	59		this subchapter control.
53	60		(b) The purpose of this subchapter is to make available a
54	61		lower-cost, supplemental financing mechanism to allow an electric
55	62		utility operating solely outside of ERCOT to obtain timely recovery
56	63		of system restoration costs under Subchapter I through
57	64		securitization and the issuance of transition bonds or system
58	65		restoration bonds by an issuer other than the electric utility or an
59	66		affiliated special purpose entity. Financing of system restoration
60	67		costs under this subchapter is a valid and essential public
61	68		purpose.
62	69		(c) The Texas Electric Utility System Restoration
63	70		Corporation is created under this subchapter as a special purpose
64	71		public corporation and instrumentality of the state for the
65	72		essential public purpose of providing a lower-cost, supplemental
66	73		financing mechanism available to the commission and an electric
67	74		utility to attract low-cost capital to finance system restoration
68	75		costs.
69	76		(d) In approving securitization under this subchapter, the
70	77		commission shall ensure that customers are not harmed as a result of
71	78		any financing through the Texas Electric Utility System Restoration
72	79		Corporation and that any financial savings or other benefits are
73	80		appropriately reflected in customer rates.
74	81		(e) System restoration bonds issued under this subchapter
75	82		will be solely the obligation of the issuer and the corporation as
76	83		borrower, if applicable, and will not be a debt of or a pledge of the
77	84		faith and credit of the state.
78	85		(f) System restoration bonds issued under this subchapter
79	86		shall be nonrecourse to the credit or any assets of the state and
80	87		the commission.
81	88		(g) This subchapter does not limit or impair the
82	89		commission's jurisdiction under this title to regulate the rates
83	90		charged and the services rendered by electric utilities in this
84	91		state.
85	92		(h) An electric utility receiving the proceeds of
86	93		securitization financing under this subchapter is not required to
87	94		provide utility services to the corporation or the state as a result
88	95		of receiving such proceeds except in the role of the corporation or
89	96		the state as a customer of the electric utility. This subchapter
90	97		does not create an obligation of the corporation or an issuer to
91	98		provide electric services to the electric utility or its customers.
92	99		Sec. 36.452. DEFINITIONS. (a) In this subchapter:
93	100		(1) "Corporation" means the Texas Electric Utility
94	101		System Restoration Corporation.
95	102		(2) "Issuer" means the corporation or any other
96	103		corporation, public trust, public instrumentality, or entity that
97	104		issues system restoration bonds approved by a financing order.
98	105		(b) For the purposes of this subchapter, "qualified costs,"
99	106		as defined by Section 39.302 and as used in Subchapter G, Chapter
100	107		39, also includes all costs of establishing, maintaining, and
101	108		operating the corporation and all costs of the corporation and an
102	109		issuer in connection with the issuance and servicing of the system
103	110		restoration bonds, all as approved in the financing order.
104	111		(c) Except as otherwise specifically provided by this
105	112		subchapter, any defined terms provided by Subchapter I of this
106	113		chapter and, if made applicable by Subchapter I of this chapter,
107	114		Subchapter G, Chapter 39, have the same meaning in this subchapter.
108	115		Sec. 36.453. CREATION OF CORPORATION. (a) The corporation
109	116		is a nonprofit corporation and instrumentality of the state, and
110	117		shall perform the essential governmental function of financing
111	118		system restoration costs in accordance with this subchapter. The
112	119		corporation:
113	120		(1) shall perform only functions consistent with this
114	121		subchapter;
115	122		(2) shall exercise its powers through a governing
116	123		board;
117	124		(3) is subject to the regulation of the commission;
118	125		and
119	126		(4) has a legal existence as a public corporate body
120	127		and instrumentality of the state separate and distinct from the
121	128		state.
122	129		(b) Assets of the corporation may not be considered part of
123	130		any state fund. The state may not budget for or provide any state
124	131		money to the corporation. The debts, claims, obligations, and
125	132		liabilities of the corporation may not be considered to be a debt of
126	133		the state or a pledge of its credit.
127	134		(c) The corporation must be self-funded. Before the
128	135		imposition of transition charges or system restoration charges, the
129	136		corporation may accept and expend for its operating expenses money
130	137		that may be received from any source, including financing
131	138		agreements with the state, a commercial bank, or another entity to:
132	139		(1) finance the corporation's obligations until the
133	140		corporation receives sufficient transition property to cover its
134	141		operating expenses as financing costs; and
135	142		(2) repay any short-term borrowing under any such
136	143		financing agreements.
137	144		(d) The corporation has the powers, rights, and privileges
138	145		provided for a corporation organized under Chapter 22, Business
139	146		Organizations Code, subject to the express exceptions and
140	147		limitations provided by this subchapter.
141	148		(e) An organizer selected by the executive director of the
142	149		commission shall prepare the certificate of formation of the
143	150		corporation under Chapters 3 and 22, Business Organizations Code.
144	151		The certificate of formation must be consistent with the provisions
145	152		of this subchapter.
146	153		(f) State officers and agencies are authorized to render
147	154		services to the corporation, within their respective functions, as
148	155		may be requested by the commission or the corporation.
149	156		(g) The corporation or an issuer may:
150	157		(1) retain professionals, financial advisors, and
151	158		accountants the corporation or issuer considers necessary to
152	159		fulfill the corporation's or issuer's duties under this subchapter;
153	160		and
154	161		(2) determine the duties and compensation of a person
155	162		retained under Subdivision (1), subject to the approval of the
156	163		commission.
157	164		(h) The corporation is governed by a board of five directors
158	165		appointed by the commission for two-year terms.
159	166		(i) An official action of the board requires the favorable
160	167		vote of a majority of the directors present and voting at a meeting
161	168		of the board.
162	169		Sec. 36.454. POWERS AND DUTIES OF CORPORATION. (a) The
163	170		corporation, in each instance subject to the prior authorization of
164	171		the commission, shall participate in the financial transactions
165	172		authorized by this subchapter. The corporation may not engage in
166	173		business activities except those activities provided for in this
167	174		subchapter and those ancillary and incidental thereto. The
168	175		corporation or an issuer may not apply proceeds of system
169	176		restoration bonds or system restoration charges to a purpose not
170	177		specified in a financing order, to a purpose in an amount that
171	178		exceeds the amount allowed for such purpose in the order, or to a
172	179		purpose in contravention of the order.
173	180		(b) The board of the corporation, under the provisions of
174	181		this subchapter, may employ or retain persons as are necessary to
175	182		perform the duties of the corporation.
176	183		(c) The corporation may:
177	184		(1) acquire, sell, pledge, or transfer transition
178	185		property as necessary to effect the purposes of this subchapter
179	186		and, in connection with the action, agree to such terms and
180	187		conditions as the corporation deems necessary and proper,
181	188		consistent with the terms of a financing order:
182	189		(A) to acquire transition property and to pledge
183	190		such transition property, and any other collateral:
184	191		(i) to secure payment of system restoration
185	192		bonds issued by the corporation, together with payment of any other
186	193		qualified costs; or
187	194		(ii) to secure repayment of any borrowing
188	195		from any other issuer of system restoration bonds; or
189	196		(B) to sell the transition property to another
190	197		issuer, which may in turn pledge that transition property, together
191	198		with any other collateral, to the repayment of system restoration
192	199		bonds issued by the issuer together with any other qualified costs;
193	200		(2) issue system restoration bonds on terms and
194	201		conditions consistent with a financing order;
195	202		(3) borrow funds from an issuer of system restoration
196	203		bonds to acquire transition property, and pledge that transition
197	204		property to the repayment of any borrowing from an issuer, together
198	205		with any related qualified costs, all on terms and conditions
199	206		consistent with a financing order;
200	207		(4) sue or be sued in its corporate name;
201	208		(5) intervene as a party before the commission or any
202	209		court in this state in any matter involving the corporation's
203	210		powers and duties;
204	211		(6) negotiate and become a party to contracts as
205	212		necessary, convenient, or desirable to carry out the purposes of
206	213		this subchapter; and
207	214		(7) engage in corporate actions or undertakings that
208	215		are permitted for nonprofit corporations in this state and that are
209	216		not prohibited by, or contrary to, this subchapter.
210	217		(d) The corporation shall maintain separate accounts and
211	218		records relating to each electric utility that collects system
212	219		restoration charges for all charges, revenues, assets,
213	220		liabilities, and expenses relating to that utility's related system
214	221		restoration bond issuances.
215	222		(e) The board of the corporation may not authorize any
216	223		rehabilitation, liquidation, or dissolution of the corporation and
217	224		a rehabilitation, liquidation, or dissolution of the corporation
218	225		may not take effect as long as any system restoration bonds are
219	226		outstanding unless adequate protection and provision have been made
220	227		for the payment of the bonds pursuant to the documents authorizing
221	228		the issuance of the bonds. In the event of any rehabilitation,
222	229		liquidation, or dissolution, the assets of the corporation must be
223	230		applied first to pay all debts, liabilities, and obligations of the
224	231		corporation, including the establishment of reasonable reserves
225	232		for any contingent liabilities or obligations, and all remaining
226	233		funds of the corporation must be applied and distributed as
227	234		provided by an order of the commission.
228	235		(f) Before the date that is two years and one day after the
229	236		date that the corporation no longer has any payment obligation with
230	237		respect to any system restoration bonds, including any obligation
231	238		to an issuer of any system restoration bonds outstanding, the
232	239		corporation may not file a voluntary petition under federal
233	240		bankruptcy law and neither any public official nor any
234	241		organization, entity, or other person may authorize the corporation
235	242		to be or to become a debtor under federal bankruptcy law during that
236	243		period. The state covenants that it will not limit or alter the
237	244		denial of authority under this subsection or Subsection (e), and
238	245		the provisions of this subsection and Subsection (e) are hereby
239	246		made a part of the contractual obligation that is subject to the
240	247		state pledge set forth in Section 39.310.
241	248		(g) The corporation shall prepare and submit to the
242	249		commission for approval an annual operating budget. If requested by
243	250		the commission, the corporation shall prepare and submit an annual
244	251		report containing the annual operating and financial statements of
245	252		the corporation and any other appropriate information.
246	253		Sec. 36.455. COMMISSION REGULATION OF CORPORATION. The
247	254		commission shall regulate the corporation as provided by this
248	255		subchapter and consistent with the manner in which it regulates
249	256		public utilities. Notwithstanding the regulation authorized by
250	257		this section, the corporation is not a public utility.
251	258		Sec. 36.456. FINANCING ORDER. (a) This section applies to
252	259		the commission's issuance of a financing order under this
253	260		subchapter.
254	261		(b) Except as otherwise specifically provided by this
255	262		subchapter, the provisions of Subchapter I of this chapter and, to
256	263		the extent made applicable to Subchapter I of this chapter,
257	264		Subchapter G, Chapter 39, that address the commission's issuance of
258	265		a financing order apply to the commission's issuance of a financing
259	266		order under this subchapter.
260	267		(c) The corporation and any issuer must be a party to the
261	268		commission's proceedings that address the issuance of a financing
262	269		order along with the relevant electric utility.
263	270		(d) In addition to the requirements of Subchapter I, as
264	271		applicable, a financing order issued under this subchapter must:
265	272		(1) require the sale, assignment, or other transfer to
266	273		the corporation of certain specified transition property created by
267	274		the financing order in the manner contemplated by Section 39.308,
268	275		and, following that sale, assignment, or transfer, require that
269	276		system restoration charges paid under any financing order be
270	277		created, assessed, and collected as the property of the
271	278		corporation, subject to subsequent sale, assignment, or transfer by
272	279		the corporation as authorized under this subchapter;
273	280		(2) authorize:
274	281		(A) the issuance of system restoration bonds by
275	282		the corporation secured by a pledge of specified transition
276	283		property, and the application of the proceeds of those system
277	284		restoration bonds, net of issuance costs, to the acquisition of the
278	285		transition property from the electric utility; or
279	286		(B) the acquisition of specified transition
280	287		property from the electric utility by the corporation financed:
281	288		(i) by a loan by an issuer to the
282	289		corporation of the proceeds of system restoration bonds, net of
283	290		issuance costs, secured by a pledge of the specified transition
284	291		property; or
285	292		(ii) by the acquisition by an issuer from
286	293		the corporation of the transition property financed from the net
287	294		proceeds of transition bonds issued by the issuer; and
288	295		(3) authorize the electric utility to serve as
289	296		collection agent to collect the system restoration charges and
290	297		transfer the collected charges to the corporation, the issuer, or a
291	298		financing party, as appropriate.
292	299		(e) After issuance of the financing order, the corporation
293	300		shall arrange for the issuance of system restoration bonds as
294	301		specified in the financing order by it or another issuer selected by
295	302		the corporation and approved by the commission.
296	303		(f) System restoration bonds issued pursuant to a financing
297	304		order under this section are secured only by the related transition
298	305		property and any other funds pledged under the bond documents. No
299	306		assets of the state or electric utility are subject to claims by
300	307		such bondholders. Notwithstanding the provisions of Subchapter G,
301	308		Chapter 39, following assignment of the transition property, the
302	309		electric utility does not have any beneficial interest or claim of
303	310		right in such system restoration charges or in any transition
304	311		property.
305	312		Sec. 36.457. SEVERABILITY. Effective on the date the first
306	313		system restoration bonds associated with system restoration costs
307	314		are issued under this subchapter, if any provision in this title or
308	315		portion of this title is held to be invalid or is invalidated,
309	316		superseded, replaced, repealed, or expires for any reason, that
310	317		occurrence does not affect the validity or continuation of this
311	318		subchapter, Subchapter I of this chapter, as that subchapter
312	319		applies to this subchapter, Subchapter G, Chapter 39, as that
313	320		subchapter applies to this subchapter, or any part of those
314	321		provisions, or any other provision of this title that is relevant to
315	322		the issuance, administration, payment, retirement, or refunding of
316	323		system restoration bonds or to any actions of the electric utility,
317	324		its successors, an assignee, a collection agent, the corporation,
318	325		an issuer, or a financing party, and those provisions shall remain
319	326		in full force and effect.
320	327		SECTION 3. Section 37.056(c), Utilities Code, is amended to
321	328		read as follows:
322	329		(c) The commission shall grant each certificate on a
323	330		nondiscriminatory basis after considering:
324	331		(1) the adequacy of existing service;
325	332		(2) the need for additional service;
326	333		(3) the effect of granting the certificate on the
327	334		recipient of the certificate and any electric utility serving the
328	335		proximate area; and
329	336		(4) other factors, such as:
330	337		(A) community values;
331	338		(B) recreational and park areas;
332	339		(C) historical and aesthetic values;
333	340		(D) environmental integrity;
334	341		(E) the probable improvement of service or
335	342		lowering of cost to consumers in the area if the certificate is
336	343		granted, including any potential economic or reliability benefits
337	344		associated with dual fuel and fuel storage capabilities in areas
338	345		outside the ERCOT power region; and
339	346		(F) to the extent applicable, the effect of
340	347		granting the certificate on the ability of this state to meet the
341	348		goal established by Section 39.904(a) of this title.
342	349		SECTION 4. Section 37.058, Utilities Code, is amended by
343	350		adding Subsection (e) to read as follows:
344	351		(e) Notwithstanding any other provision of this title, an
345	352		electric utility operating solely outside of the ERCOT power region
346	353		may, but shall not be required to, obtain a certificate to install,
347	354		own, or operate a generation facility with a capacity of 10
348	355		megawatts or less.
349	356		SECTION 5. This Act takes effect immediately if it receives
350	357		a vote of two-thirds of all the members elected to each house, as
351	358		provided by Section 39, Article III, Texas Constitution. If this
352	359		Act does not receive the vote necessary for immediate effect, this
353	360		Act takes effect September 1, 2021.
354		-	______________________________ ______________________________
355		-	President of the Senate Speaker of the House
356		-	I certify that H.B. No. 1510 was passed by the House on April
357		-	20, 2021, by the following vote: Yeas 145, Nays 0, 1 present, not
358		-	voting.
359		-	______________________________
360		-	Chief Clerk of the House
361		-	I certify that H.B. No. 1510 was passed by the Senate on May
362		-	19, 2021, by the following vote: Yeas 31, Nays 0.
363		-	______________________________
364		-	Secretary of the Senate
365		-	APPROVED: _____________________
366		-	Date
367		-	_____________________
368		-	Governor
	361	+	* * * * *